Spreadsheet Models for Managers

Getting Access to Spreadsheet Models for Managers

If you use Excel to model businesses, business processes, or
business transactions, this course will change your life. You’ll learn how to create tools for yourself that will amaze
even you. Unrestricted use of this material is available in two ways.

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It resides on your computer, and you can use it anywhere. No need for Internet access.

At this Web site

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Here’s the data that made the previous page’s plot. The result at the bottom above is valid
for the average over a cycle for the special case of constant demand with a reorder point of 0.

This is an example of an inventory strategy. In particular, this is a “just-in-time”
strategy. Since demand is constant, a just-in-time strategy produces periodic reorders, but if demand
were variable and aperiodic, a just-in-time strategy might have aperiodic reorders.

Inventory strategy has received much attention from the more mathematically-oriented
management scientists, and it’s central to the study of logistics and supply chain analysis. In
recent years, some have even made connections to the science of chaos.

Although the assumption of constant demand is critical to justifying the
derivation of the formula for Economic Order Quantity, most problems don’t satisfy that
requirement in the strict sense. But EOQ is nevertheless a valuable concept in two kinds of
circumstances. The first case is when the time scale of the inventory management decisions is
much shorter than the time scale of the variations in demand. And the second is when the
fluctuations in demand occur much more rapidly than the inventory management decisions.

These two approximations occur repeatedly in modeling problems. Watch for opportunities to
apply them elsewhere.